Assignment on Income Statement Presented below are selected ledger accounts of Metro Inc. at December 31, 20x1. Cash 185,000 Prepaid insurance 24,000 Merchandise inventory, 1/1/20X1 535,000 Advertising expense 54,000 Sales 4,275,000 Prepaid income tax 93,000 Advances from customers 117,000 Depreciation of sales equipment 36,000 Purchases 2,786,000 Telephone – sales 17,000 Purchase discounts 27,000 Unearned rent 8,000 Sales salaries 284,000 Rental revenue 240,000 Sales returns 79,000 Interest expense 176,000 Transportation-in 72,000 Common stock ($10 par) 900,000 Sales equipment 135,500 Additional paid-in capital 250,000 Accounts receivable 142,500 Retained earnings 166,000 Metro’s tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $686,000. A pretax $5,000 loss was recognized on the sale of Division Y (a major component of the company). This division had earned a pretax operating income of $2,500 in 20x1. During 20x1, 90,000 common shares were outstanding. Prepare a multiple-step income statement for the year ending December 31, 20x1. Some of the above accounts are not reported on the income statement. You must report the earnings per share.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assignment on Income Statement

Presented below are selected ledger accounts of Metro Inc. at December 31, 20x1.

Cash	185,000	Prepaid insurance	24,000
Merchandise inventory, 1/1/20X1	535,000	Advertising expense	54,000
Sales	4,275,000	Prepaid income tax	93,000
Advances from customers	117,000	Depreciation of sales equipment	36,000
Purchases	2,786,000	Telephone – sales	17,000
Purchase discounts	27,000	Unearned rent	8,000
Sales salaries	284,000	Rental revenue	240,000
Sales returns	79,000	Interest expense	176,000
Transportation-in	72,000	Common stock ($10 par)	900,000
Sales equipment	135,500	Additional paid-in capital	250,000
Accounts receivable	142,500	Retained earnings	166,000

Metro’s tax rate on all items is 34%. A physical inventory indicates that the ending inventory is $686,000. A pretax $5,000 loss was recognized on the sale of Division Y (a major component of the company). This division had earned a pretax operating income of $2,500 in 20x1. During 20x1, 90,000 common shares were outstanding.

Prepare a multiple-step income statement for the year ending December 31, 20x1. Some of the above accounts are not reported on the income statement. You must report the earnings per share.

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